Buying a home is the American Dream! Most people want a place to call their own. Whether your dream home is in a neighborhood, in the country, in town or condo living, these 10 steps to buying a home can help you understand the process and be better prepared when the time comes!
#1 – Save for a Down Payment and/or Closing Costs
Buying a home means some out of pocket costs to a buyer. Many people think you need a 20% down payment and that’s not just not true. Outside of down payments, there can be earnest money and inspection fees and costing costs. Having the cash in the bank means you can jump when the right home comes along!
#2 – Know Your Credit Score
You credit score tells lenders what your historic ability to pay back debt has been. It’s a snapshot they use to decide if and how much a lender will loan you when buying a home. Knowing your credit score and history can really impact your ability to secure a mortgage and your mortgage interest rate.
Did you know that 1 in 5 credit reports has inaccurate data or mistakes? These mistakes can cost you in interest rate and the amount you can borrow!
Get your free credit report and then verify the information. If there are mistakes, you can request modifications from the credit bureau! It’s really not hard and it can make all the difference!
#3 – Hire a REALTOR
An agent is your leverage. They have the skills, knowledge and experience that will go to work for you in finding your dream home! Their guidance will make a big difference in price, negotiation, repairs and more! You owe it to yourself to be represented by the BEST!
#4 – Get Pre-Approved
Finding the right lender and mortgage loan type is SUPER important in when buying a home. You need your pre-approval letter in-hand when you start looking at homes. You need to know what you comfortable paying for a home or monthly payment and getting pre-approved takes care of this.
We’ve seen more than one buyer has lost out on purchasing a home because they weren’t already pre-approved. Another buyer swooped in with their pre-approval and got the home instead! Don’t be the unprepared buyer.
In today’s market, most sellers won’t even consider an offer without a pre-approval letter (or proof of funds if you are paying cash.)
Remember talking about the down payment above? Your lender will pre-approve you and help you find the loan type that best fits your needs and wants. From 0% down like a VA or USDA loan, to 3.5% down for FHA and some insured conventional loans to 5% or more down for regular conventional loans, your lender is your best resource to help you decide.
#5 – Go Home Shopping!
This is the fun part! 94% of home buyers start their search online so they can narrow things like type, location, style, amenities, etc… Once you do, then your REALTOR can make appointments to visit homes that fit your criteria! Now’s the time to buy!
#6 – Make an Offer
You’re ready to buy! Your agent will help you determine things like fair offer price and terms for the home. In a competitive market, you may not be the only buyer making an offer. Your REALTOR will help you stand out in the process and get the home you want!
#7 – Get a Home Inspection
Now that you’re under contract to buy a home, you’ll need inspections. Inspections help ensure there aren’t any hidden issues with the home and that you understand the condition it is currently in. We always recommend a whole house and a pest inspection, at minimum.
#8 – Home Appraisal
Your lender will order an appraisal of the home. This is to ensure the home’s market value is in line with the agreed upon purchase price. Lenders typically will only issue a mortgage for the appraised value.
#9 – Closing Day!
Once your loan has been given the “Clear to Close”, your REALTOR will work with the other agent and the title company to schedule your closing appointment. This is the day you will sign all the paperwork that makes the home yours – officially!
#10 – Move In!!!
Congratulations! You bought a home and made it to moving day!
Obviously, this isn’t an all inclusive list but more like the 10,000 foot overview. This are the major milestones in the timeline of buying a home. Your REALTOR will be doing lots in the background, but since you hired one, you don’t have to stress. You can just enjoy the process and starting making plans to make the home your own!